Residents have described seeing "panic and terror" in the streets of Beirut after a bomb blast hit the Lebanese capital killing five people including a former minister.

"The explosion caught motorists driving in the morning rush hour here. There was terror and panic among residents. There was a big ball of fire and panic everywhere and then we learned that Chatah was the target," Adel-Raouf Kneio said.

Lebanese army soldiers run to secure the site of an explosion. Credit: Reuters

The blast, which was heard across the city at around 9:40 am local time, damaged restaurants, coffee shops and offices in downtown Beirut.

"I heard a huge explosion and saw a ball of fire and palls of black smoke. We run out of our offices to the streets," Hassan Akkawi, who works in a finance company nearby, said.

Civil Defence personnel extinguish fires on cars at the site of an explosion in Beirut. Credit: Reuters

Witnesses described seeing glass everywhere, cars on fire and smelling explosives in the air.

Much of Beirut went into lockdown following the explosion, with police blocking off roads across the city.

A Lebanon-based al Qaeda-linked group, the Abdullah Azzam Brigades, claimed responsibility for the attack and threatened further attacks unless Iran withdraws forces from Syria, where they have backed Assad's war against rebels.

Chatah was on his way to attend a meeting when the explosion tore through his car.

A Reuters witness at the scene said his car was "totally destroyed, it is a wreck", claiming they found Chatah's identity card, torn and charred inside his car.